Some strong performances, including Netflix in Australia and MyTV Super in Hong Kong, but overall uptake of premium video services remains low

Consumers have responded favorably to some niche streaming apps focused on kids and sports content, as well as free-to-air catch-up services in certain markets

Australia and Hong Kong perform well while sentiment on premium online video turning positive in most markets except Singapore, Malaysia and Taiwan

(Hong Kong/Singapore July17, 2017) Premium online video services have started to gain traction in Asia Pacific but have a long way to go before achieving mass adoption, according to a new report from Media Partners Asia (MPA), a leading independent consulting and research provider. MPA, in partnership with consumer research specialist BDRC Continental, has surveyed more than 15,000 internet users across eight markets for the latest edition of its Asia Pacific Video Consumer Study, which is published twice a year. The July 2017 report covers Australia, Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Taiwan and Thailand.

Take-up of premium online video services, including ad-supported and subscription-based offerings, remains relatively low, the survey suggested, reflecting the early stages of transition for user behavior as well as business development in both developed and emerging markets. Global platforms such as YouTube, now joined by Facebook, are establishing domestic online video strongholds, reaping the rewards of marketplaces that are still largely geared towards ad-supported services. However, the report points to encouraging momentum for subscription and freemium-based offerings in Australia and Hong Kong in particular, as well as early signs of momentum in markets such as the Philippines.

Aravind Venugopal, MPA vice president, said: “Premium content providers with ad-supported and freemium online video services have much to do if they want to cater to mass audiences. Netflix is putting in a strong performance in Australia, and has started to show deeper usage patterns in niche segments across Southeast Asia and Taiwan. iQiyi has also enjoyed a good start in Taiwan. Freemium offerings from local broadcasters are also showing promise. MyTV Super from Hong Kong broadcaster TVB has momentum, while Toggle, from Singapore broadcaster Mediacorp, has attracted a respectable audience. PCCW has managed to scale usage and adoption across its OTT offerings in Hong Kong. In Southeast Asia’s growth markets, actual engagement and usage of ad-supported and subscription-based premium video services is low among internet users, although watch time among engaged users is growing in certain markets. Online video is at an early stage of development in Indonesia, the Philippines and Thailand. While reach has substantially grown for some OTT platforms through wholesale telco partnerships, usage is low, although there is positive momentum in markets like Indonesia.”

Take-Up & Usage. Take-up of premium online video services was highest in Hong Kong among the eight markets covered by MPA’s Asia Pacific Video Consumer Study. This was thanks to the popularity of catch-up and freemium pay services from the territory’s two leading players: telecoms leader PCCW, which runs a free-to-air and a pay-TV service as well as OTT offerings including Viu and ViuTV, and terrestrial leader TVB, which operates OTT offerings MyTV and MyTV Super.

Individual services also proved to be popular in other developed markets, notably including Netflix in Australia, Toggle in Singapore and iQiyi in Taiwan. In general, engagement time among internet users is relatively low, especially on mobile, reflecting widespread growth potential across developed and emerging markets, especially for premium ad-supported services. Most ad-supported services, including those backed by free-to-air broadcasters, were used by no more than of 15% of internet users on a regular basis, the survey findings indicated.

Net Promoter Scores. In general, premium online video services have much to do to win over hearts and minds in Australia, Southeast Asia, Hong Kong and Taiwan. Net promoter scores – a measure of how likely current and past customers are to recommend a service – resided in negative territory for most offerings covered by the Asia Pacific Video Consumer Study. There were some notable exceptions, including Netflix, whose performance has generally improved since the first survey last year, as well as local freemium offerings in Hong Kong, the Philippines and Singapore. The NPS score will remain negative for most services in this first phase of OTT development because customer churn is so high, especially across Southeast Asia, Hong Kong and Taiwan. As a result, detractors will inevitably outweigh promoters.

Current and past customers in Malaysia, Singapore and Taiwan tended to regard all or almost all premium online video services in a negative light. User satisfaction was more evident in Australia, Hong Kong and Indonesia and the Philippines, where positive scores were more frequent and most negative scores less pronounced. Thailand stood out as the most enthusiastic market covered in the survey, reflecting in part the diversity of the segment with a good spread of local ad-supported and subscription-based services enjoying positive scores.

Overlap between SVOD & pay-TV. In developed markets with high levels of pay-TV penetration, SVOD (subscription video-on-demand) customers are likely to also have access to pay-TV. In Taiwan for example, 94% of SVOD subs also have a pay-TV subscription. The overlap is almost as high in Hong Kong and Singapore.

In emerging markets, with lower levels of pay-TV penetration, a different competitive dynamic is taking shape. In Indonesia and Philippines, less than a third of SVOD subs have a pay-TV subscription. Telcos in both markets are bundling SVOD services with fixed and mobile broadband plans, subsidizing subscription payments and data consumption. SVOD subs have access to between two to three paid services on average across the eight markets covered by the survey.

About Asia Pacific Video Consumer Study

Asia Pacific Video Consumer Study is a biannual series from Media Partners Asia (MPA), offering detailed insights into how consumers engage, use and interact with SVOD and freemium online video services in eight markets in Asia Pacific: Australia, Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Thailand and Taiwan. Research for the latest edition of MPA’s Asia Pacific Video Consumer Study, conducted in partnership with BDRC Continental, was carried out between January and March 2017, with a sample size of more than 15,000 internet users across a broad range of demographics. Multiple metrics and indices are covered across consumer, media & telecom ecosystems, including deep-dive analysis across ~100 OTT platforms.

As a leading independent consulting and research provider, Media Partners Asia offers a range of customized services to help drive business development, strategy & planning, M&A, new products & services and research. Based in Hong Kong, Singapore and India, our teams have local depth and expertise across 18 key markets in Asia Pacific and key international territories. We offer in-depth research reports across key industry sectors, customized consulting services and industry events to spread knowledge and unlock partnerships.